US Federal Meeting - What to Expect?
1. Current interest rate situation:
Current interest rates in the US range from 5.25% to 5.5% (the highest level in more than 20 years).
Inflation is still slightly above the 2% target, despite its decline compared to last year.
2. Possible scenarios for tomorrow's decision:
Keeping the interest rate unchanged (the most likely scenario):
The Fed may prefer to wait for more inflation data before making a decision to cut.
This option would be viewed as a "Hawkish" signal if accompanied by warnings about ongoing inflation.
Interest rate cut (less likely):
Markets may be surprised by a slight cut (0.25%), especially if signs of economic slowdown or sharp decline in inflation appear.
This would be a positive "Dovish" signal for the markets in general.
What is the impact of the decision on the crypto market?
If interest rates are cut:
Potential significant rise in cryptocurrencies (especially Bitcoin and Ethereum).
Increased risk appetite among investors.
A weak dollar drives liquidity towards alternative assets like crypto.
If interest rates are kept unchanged:
Could lead to volatility or temporary downward pressure on the crypto market.
Especially if accompanied by warnings from the Fed regarding inflation.
Important Note:
The crypto market often moves significantly before and after the announcement based on expectations and how the markets interpret the tone of the press release and the press conference held by Jerome Powell (Chair of the Fed).
